Raw material prices in the automotive industry: an econometric analysis of the dynamics of plastics prices.

Summary The automotive sector is increasingly dependent on plastics, whose price level and volatility have risen sharply over the last ten years, presumably due to changes in the price of oil, which is the main input required for their manufacture. This thesis aims to provide econometric tools to analyze and manage the risk of price variations of the main plastic materials used in the automotive industry. Using cointegration methodologies, we show that long-run equilibrium relationships and short-run dynamics highlight a transmission mechanism of production cost variations on the price of plastics located downstream of the production process. The existence of significant cointegration relationships between petrochemical and oil prices justifies the development of hedging strategies against production cost variations and the estimation of error correction models that allow for the refinement of price forecasts.